The Overstock Story Thickens (OSTK)

The Stalwart submits: Recently, we brought you The Case Against Overstock.com, summarizing the argument against the company made by blogger/hedge fund manager Jeff Matthews. In a series of posts, Mr. Matthews has spelled out a convincing case that something "isn't right" with the company. Too many questions unanswered, and the appearance, sometimes of outright fraud.

Now, we generally know it to be true that when a company focuses much of it's efforts on short-bashing they're probably wasting their time or, more likely, masking up deeper problems. After all, the best way to hurt the shorts is in their pocketbook via good performance.

Via highbeam I found a bizarre transcript of an interview between Ron Insana and Patrick Byrne (Overstock.com's CEO) in which he lashes out at a conspiracy of naked-short-seller:

INSANA: First of all, give us the evidence that you have that a naked short-selling scheme is behind the decline in your stock price?

BYRNE: We have affidavits from people who participated.

INSANA: All right. Can you be more specific?

BYRNE: No, I could, I`m not going to. We have affidavits from people who participated.

INSANA: And what did they say was done exactly?

BYRNE: They say that the research was supplied to Rocker before it was published to the other clients, that Rocker had a hand in editing it, making changes, making demands, that certain grades be lowered and then ultimately, that Camelback (ph).

INSANA: Which is in now Gradient, right?

BYRNE: Gradient -- I`m sorry, that Gradient actually hold the research so he could build his position. It continues, I mean, the same people, say Herb Greenberg at thestreet.com, was -- is certainly linked to this.

INSANA: Linked in what way? I mean, you are making now allegations about journalists helping others to front-run or trade illegally in the shares of your company stock.

BYRNE: That`s correct, that`s what I am doing.

INSANA: All right. So what evidence do you have that a journalist.

BYRNE: I`ve got affidavits from people who were involved and can tell the whole story and that I look forward to the day that those are public.

INSANA: All right. Now, let me ask you about the SEC investigation which you disclosed on your conference call this morning. Is this SEC investigation, which you said was begun in February and is informal, an investigation of the short sellers or an investigation of your company and its financials?

BYRNE: Well, first of all, I think I`m not supposed to officially know. I was tipped off anonymously from folks within Wall Street that the SEC had gone on a fishing trip. I`ve been highly.

I believe there’s been a plan since we were in our teens to destroy our stock, drive it down to $6 to $10...

These are the folks I’m going to talk about….Leon Black I’ve put in there just because he’s a well-known financier hedge fund guy. Got nothing to say about him. Sort of putting him in as an example of a -- just somebody in a hedge fund...

Jim Caruthers is an interesting fellow. He’s up at Eastborne Capital, north of San Francisco. Eastborne has an “E

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